Does We Win (NSE:WEWIN) Deserve A Spot On Your Watchlist?

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like We Win (NSE:WEWIN). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide We Win with the means to add long-term value to shareholders.

View our latest analysis for We Win

How Fast Is We Win Growing Its Earnings Per Share?

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So EPS growth can certainly encourage an investor to take note of a stock. It's good to see that We Win's EPS has grown from ₹2.07 to ₹2.37 over twelve months. There's little doubt shareholders would be happy with that 14% gain.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. EBIT margins for We Win remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 17% to ₹488m. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

Since We Win is no giant, with a market capitalisation of ₹447m, you should definitely check its cash and debt before getting too excited about its prospects.

Are We Win Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

A great takeaway for shareholders is that company insiders within We Win have collectively spent ₹2.8m acquiring shares in the company. While this isn't much, we also note an absence of sales. We also note that it was the Chairman of the Board, Abhishek Gupta, who made the biggest single acquisition, paying ₹1.3m for shares at about ₹38.81 each.

These recent buys aren't the only encouraging sign for shareholders, as a look at the shareholder registry for We Win will reveal that insiders own a significant piece of the pie. To be exact, company insiders hold 86% of the company, so their decisions have a significant impact on their investments. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. Of course, We Win is a very small company, with a market cap of only ₹447m. That means insiders only have ₹385m worth of shares, despite the large proportional holding. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

Does We Win Deserve A Spot On Your Watchlist?

One important encouraging feature of We Win is that it is growing profits. In addition, insiders have been busy adding to their sizeable holdings in the company. These factors alone make the company an interesting prospect for your watchlist, as well as continuing research. Even so, be aware that We Win is showing 2 warning signs in our investment analysis , you should know about...

Keen growth investors love to see insider buying. Thankfully, We Win isn't the only one. You can see a a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.